Obamacare Waivers Pick Winners And Losers

It’s that time of year, and Secretary of Health and Human Services Kathleen Sebelius is in the giving spirit.

In this case, the “gift” is an exemption from the health care law the president signed earlier this year. Over the past few months, Secretary Sebelius has given more than 200 companies and unions waivers from provisions of the new law. The specific criteria required for obtaining a waiver aren’t clear.

Without these waivers, companies had warned that they might have to drop health coverage they provide to some of their employees. McDonald’s, which received one of the first waivers, had warned that 30,000 employees could lose their current coverage. The employees have so-called “mini-med” plans, which have a low cost and cap annual benefits. According to the Wall Street Journal, about 1.4 million Americans have these plans.

For employees of companies that offer mini-med plans, the waivers are welcome. These workers will get to keep the health coverage they currently have. According to a memo from McDonald’s obtained by the Wall Street Journal, many employees who stood to lose their coverage would be left “without an affordable, comparably designed alternative until 2014.” So, without these waivers, those employees may have not had any coverage at all for three years.

No one should lose his or her health coverage as a result of the ObamaCare law, but waivers are not the way to achieve that. Indeed, the waivers demonstrate the flaws in the health care law itself and in the process of its implementation.

In his campaign to pass the law, the president promised repeatedly that those who liked their current coverage would be able to keep it. But, as we now know, provisions of the law would cause individuals to lose their current coverage — that’s why the administration is waiving provisions of the law it worked for months to pass.

Moreover, the waivers represent a poor way to run a government. When the government picks which entities will have to abide by the law and which ones won’t, it is literally picking winners and losers. That’s not the recipe for objective or wise policymaking.

Law professor Richard Epstein makes that point in a recent column in Forbes magazine. “Make no mistake about it,” he writes, “a waiver gives the favored organization a competitive advantage over its rivals. But it is not only one applicant that pulls out all the stops. Its competitors often follow suit while simultaneously trying to block the waiver for the original applicant. Administrative expertise quickly takes a back seat to old-fashioned political muscle and intrigue.”

Old-fashioned political muscle, though, is one of the hallmarks of the health care law. It was written behind closed doors in the Capitol, and now waivers of its provisions are being dispensed based on uncertain criteria at the Department of Health and Human Services. That’s not much of a legacy for a law that many liberals tout as a grand achievement.

“Squads of health care experts and political pundits envisioned a Pax Obama for health care once the political hubbub quieted down,” says Epstein. “It won’t happen. Without major steps to overhaul or repeal ObamaCare, government by waiver will become standard operating procedure to the detriment of us all.”